What is opportunity cost give example?
When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.
What are the three examples of opportunity cost?
Opportunity Cost Examples
- Someone gives up going to see a movie to study for a test in order to get a good grade.
- At the ice cream parlor, you have to choose between rocky road and strawberry.
- A player attends baseball training to be a better player instead of taking a vacation.
- Jill decides to take the bus to work instead of driving.
What is the opportunity cost of an item?
Economists use the term opportunity cost to indicate what must be given up to obtain something that’s desired. The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.
What is opportunity cost in decision making?
“Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one.”
Is opportunity cost the same as real cost?
The real cost is the price paid by the consumer for consuming a good. Opportunity cost is the foregone cost of the next best alternative present in…
What is another name for opportunity cost in economics?
The alternative name of opportunity cost is Economic cost.
What is another word for opportunity?
In this page you can discover 58 synonyms, antonyms, idiomatic expressions, and related words for opportunity, like: chance, suitable circumstance, fortuity, good-fortune, luck, probability, event, happening, contingency, opening and fitness.
What is per unit opportunity cost?
Opportunity Cost/Per Unit Opportunity Cost This is the value of the next best alternative. We represent this as what we are losing when we change our production combination. For example, moving from A to B on the graph above has an opportunity cost of 10 units of sugar.
What is the goal of studying opportunity cost?
The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.
Why does opportunity cost decrease?
The shape of a production possibility curve (PPC) reveals important information about the opportunity cost involved in producing two goods. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.